Historic Service Charge Debt - Advice Needed

Angie_B

Hi all. I am hoping someone might be able to give me some advice.

I completed on the purchase of my flat in December 2012. It is an ex-LA flat run still managed by the management arm of the local council. At the time, we were aware that the seller of the property had outstanding service charge arrears and so placed a retention on the sale money until the arrears were cleared. Upon completion, a full balance of all outstanding service charge debts was requested from the council and received. The full balance of this was then paid off using the retention.

Now, eight months later I have suddenly received a letter from a solicitors firm acting on behalf of the council. They claim there is now an outstanding debt of almost £600 on the property and that if I do not pay this off within 7 days they will commence legal proceedings. This is the first communication I have had on this matter. I pay my service charge via standing order every month, as instructed and am completely up to date. I have checked my latest statement and all service charge payments have been made on time and in full.

After having left many messages with the solicitors, I finally managed to speak to someone who confirmed over the phone that the file was opening in September 2012, months before I completed on the flat, and that the service charge arrears were raised in the name of the seller. Now, I understand that any debt stays with the property and not the owner; however I do not understand how the council can provide a final balance at the time of completion and then come back eight months later and demand more.

I have written to both the solicitor and the council setting out my position and asking them to detail the dates these service charge arrears relate to and to explain to me why I was not informed of this debt when a full balance was requested and received back in December. I have yet to receive a response from either.

I think it is unreasonable of them to demand payment within 7 days for a debt I know nothing about and before they have provided me with any details of the debt in writing, beyond telling me that there is a debt. As far as I am aware, the balance was zero when I completed and I have paid all required service charges since then so there should not be any debt.

Sorry for the long post. I am, of course, worried about these upcoming legal proceedings and am not sure if I am doing the right thing. Does anyone have any advice, please?

BitterAndTwisted

My advice? Keep all communication to the Council IN WRITING. I wouldn't pay their £600 when they confirmed (presumably in writing) that all outstanding service-charges were reported to you at the time and which you paid in full.

Local Authorities are notorious for making up charges when it suits them. Usually from utter incompetence rather than malice.

propertyman

If the lease was granted proir to 1996 then you inherit those debts, though you are protected by the retention or undertaking.

Explain the situation to the ALMO and enforce the retention.

if the lease was granted post 1996 then you do not inherit the debt, but the freeholder can still forfeit the lease of the flat in the Court by taking action against the old owner.

Contact the old owner or pay using the retention

These provisions are set out in the Landlord and tenant Covenants Act 1995.

Angie_B

I have sent letters (proper letters, in an envelope) to both the council and their solicitors, keeping a copy for myself as well. Neither have yet responded.

Yes, we were given a copy of the service charge account in writing by the council at the time of completion. This balance was paid off in full by the retention and I confirmed in January that the payment had been received. There was never any mention of another £600.

Angie_B

propertyman wrote: »

If the lease was granted proir to 1996 then you inherit those debts, though you are protected by the retention or undertaking.

Explain the situation to the ALMO and enforce the retention.

if the lease was granted post 1996 then you do not inherit the debt, but the freeholder can still forfeit the lease of the flat in the Court by taking action against the old owner.

Contact the old owner or pay using the retention

These provisions are set out in the Landlord and tenant Covenants Act 1995.

The retention was used to pay off the balance of the service charge arrears that was advised to us by the council in December. Upon clearing the balance to zero, we believed this to be the end of the matter and there is no further retention held by the conveyance solicitor.

The lease was granted in 1989.

BitterAndTwisted

Is there any chance that the service-charges on account was paid off at the time of purchase and this £600 is the balancing-payment for the year in question?

In any case, I would write again to the Council, attaching photocopies copies of your solicitor's original enquiry and their response to him/her.

Angie_B

BitterAndTwisted wrote: »

Is there any chance that the service-charges on account was paid off at the time of purchase and this £600 is the balancing-payment for the year in question?

In any case, I would write again to the Council, attaching photocopies copies of your solicitor's original enquiry and their response to him/her.

That was my first thought when I received the letter; however this year's accounts are up to date. I have double-checked my statement and the £600 figure doesn't add up to what is remaining on the monthly payments.

Thanks. I have a copy of the original enquiry and the response from the council detailing the balance, so I will do that.

cashback101

Hi,
The Council are "estopped" from demanding any further monies from you in respect of any arrears that may have existed at the time of your purchase. You asked them for the amount to be paid to them for arrears of service charge, they told you, and you paid out of the retention, and presumably then released any surplus of the retention back to the seller. In other words you acted to your detriment on the basis of what you had been advised by the Council. They cannot now come back to you and ask for more.
I suggest you write to the solicitors and advise that any summons they issue will be defended by you on the basis of estoppel, and that under the circumstances you require them to confirm that the matter is now closed and that no further money is owed by you.

propertyman

cashback101 wrote: »

Hi,
The Council are "estopped" from demanding any further monies from you in respect of any arrears that may have existed at the time of your purchase. You asked them for the amount to be paid to them for arrears of service charge, they told you, and you paid out of the retention, and presumably then released any surplus of the retention back to the seller. In other words you acted to your detriment on the basis of what you had been advised by the Council. They cannot now come back to you and ask for more.

QUOTE]

Sorry cashback but most of that is nonsense as the information that has been provided is insufficient to establish how that £600 arose.

It is wrong to assume that "paying off the balance of arrears in December" is a balancing charge as it would be some 9 months after the year end, March 31st.

Teh OP needs not to inflate the situation but ask the simple question "for what and to which period does the £600 relate".